Brain Health: The Science Behind Financial Exploitation As We Age

by Karen D. Sullivan, Ph.D., ABPP, Owner of Pinehurst Neuropsychology

In addition to the established cognitive changes that accompany aging (mild declines in vision and hearing, processing speed, complex multitasking and rapid recall), neuropsychologists are now adding a new change: Age-Associated Financial Vulnerability (Lachs & Han, 2015). While we need to remain mindful of not becoming overly protective as society ages, recent neuroscience research suggests that added oversight and protections of complex financial transactions may be warranted for adults age 65 and older, especially for those with any degree of cognitive impairment. 

At the heart of this sensitive issue is financial capacity, which is defined as “the ability to manage one’s monetary affairs in a fashion consistent with personal self-interest and one’s values.” The capacity to engage in any type of decision making exists on a continuum and is time, knowledge and task specific. For example, someone may have medical decision-making capacity but not the capacity to enter into a complex real estate contract. Financial capacity, specifically, is made up of three types of knowledge: declarative, procedural and judgement. That is, we need to have intact knowledge about our specific assets (how much we own or possess), how to gain access to our assets and the ability to come to sensible conclusions related to these assets.

Two cognitive abilities that relate to financial capacity have been the subject of recent research and these are: deception detection and vulnerability to influence. Both of these higher order cognitive skills have been shown to decline in some normally aging older adults beginning around age 60 and worsening with advanced age (Asp et al., 2012). Those diagnosed with Mild Cognitive Impairment and all subtypes of dementia are particularly at risk for these impairments.

Depending on the degree of this decline, one’s ability to infer the intentions of others, including those with the intent to deceive, may become impaired and lead to a “doubt deficit,” in which false and far-fetched claims fail to prompt feelings and thoughts of doubt can occur. The degree of an older adult’s “doubt deficit” has been shown to predict vulnerability to influence and financial scams. Financial exploitation can come in many forms, including persuasion, manipulation and deception. There are psychological vulnerabilities that increase with age and increase the chances someone will be financially exploited. 

One approach for assessing psychological vulnerabilities that increase one’s likelihood of being financially exploited is called the “IDEAL” model (Blums, 1998) include:

Isolation from family/friends

Dependency

  • Emotional dependence: Support and encouragement
  • Physical dependence: Food preparation, help with medications, cooking or transportation
  • Information dependence: Financial or legal advice, printing out forms, going to bank/post office, bill paying, etc.

Exploitation of a vulnerability

Acquiescence

Loss of assets

The most common tactic used in financial exploitation is creating indebtedness. This means that over time a relationship loses it reciprocity and becomes more one sided with the goal of increasing reliance and dependence. The goal is to establish a “You owe me” belief in the older adult. Once this belief is accepted, the perpetrator has gained influence, giving is reversed and a disparity begins with the older adult now giving more and more to “pay the person back” for good deeds. 

10 red flags for financial exploitation 

  • Some adults between 65-85 
  • All adults over 85 
  • Recently widowed 
  • Individuals who are geographically isolated
  • Individuals who have had a significant cognitive or emotional change  
  • Recent large purchases and/or give large amounts of money and gifts to a new person
  • Deviation from previous wills
  • Multiple will changes 
  • Past or current family tensions/conflict
  • Alcohol abuse

What can you do?

If you are concerned about financial exploitation in yourself, a loved one or a friend, consider these action steps:

Consider a financial power of attorney. Designating a financial power of attorney to double check big purchases or any type of gift can be a good practice to make sure you aren’t vulnerable to losing more than you intended. 

Consult with a neuropsychologist. Neuropsychologists provide a gold standard evaluation to assess financial capacity and can make objective recommendations that protect the individual. The goal is to find the “sweet spot” between respecting individual values and preferences while supporting sound decision making. Medical insurance cannot be used for these evaluations.

Contact Adult Protective Services. This government agency exists within the Department of Social Services to protect vulnerable people, and this includes those at possible risk of abuse, neglect or exploitation including financial exploitation. Contact your local county government office for more information.

Dr. Karen Sullivan, a board-certified clinical neuropsychologist, owner of Pinehurst Neuropsychology Brain & Memory Clinic and creator of the I CARE FOR YOUR BRAIN program, can be reached at 910-420-8041 or by visiting www.pinehurstneuropsychology.com or www.icfyb.com.